Coverage for mold, mildew, and fungus is usually either completely excluded or may be very limited depending upon the policy. Although many people assume that they will have at least some coverage for mold, it is most often the case that mold, mildew, fungus, and their bi-products are excluded. Some policies may only mention “mold” while others may include terms like “organic pathogens”, “mycotoxins”, or reference the type of fungi by its scientific name, such as Penicillium. Some policies may exclude wet and dry rot and bacteria while others may not even mention mold specifically. As some courts treat mold as a pollutant, it may be excluded if a policy has an absolute pollution exclusion. Because of these variations, it is important for your investor clients to become familiar with how their policy treats mold and other pathogens.
What type of damage is excluded?
Typically, both damage to the property itself and any bodily injuries caused by the presence of mold, mildew or fungus are excluded. With the presence of mold, any damage done to sheetrock, insulation, and possibly framing will need to be addressed. The health of tenants could be affected by the presence of mold (usually respiratory issues/allergies) and there may be doctor bills from treatment or the cost of relocating tenants.
Do any federal or state environmental laws require a building to be “mold-free”?
No. However, state laws often require landlords to provide habitable housing to tenants. If a landlord does not remediate a mold problem after written notice from their tenant, that tenant may have a legal mold claim against the landlord for compromising their health and damaging their personal possessions.
What does the technical lingo for this exclusion look like in the investor client’s policy?
Sample policy language may look like this:
“Microorganism Exclusion (Absolute)
“…this Policy does not insure any loss, damage, claim, cost, expense, or other sum directly or indirectly arising out of or relating to:
Mold, mildew, fungus, spores or other microorganism of any type, nature, or description including but not limited to any substance whose presence poses an actual or potential threat to human health…”
*As insurance policies may vary, investors should check their own policy for language specific to the covered property.
What can this type of damage cost the investor?
A variety of expenses can build up when a person becomes ill from a potential case of toxic mold. Symptoms of mold exposure range from allergic reactions to intestinal damage, and in extreme cases, it may even increase susceptibility to cancer. Lawsuits regarding mold can be complicated and expensive to try. Remediation costs are typically very high as well. Not to mention the time in which a property may go vacant because it is uninhabitable for renters. Lost time, cash flow issues, and repair expenses can all come into play when dealing with mold, mildew, and fungus.
How can investors protect themselves from Mold, Mildew and Fungus?
Controlling moisture is the key to stopping mold growth! Here are some tips that can help reduce moisture, humidity, and condensation.
For the Property Owner or Manager:
- Clean and repair gutters regularly
- Make sure water runs away from the foundation to help prevent a moldy basement or crawlspace
- Maintain and clean AC and HVAC systems on a regular basis
- Keep indoor humidity low – ideally 40-50% relative humidity which can be measured with a moisture or humidity meter available at local hardware stores
- Vent appliances that produce moisture (clothes dryers, stoves, bathroom fans) to the outside
- Install dehumidifiers where needed and put them to use, especially during more humid months
- Add mold inhibitors to paints before application
- Do not carpet bathrooms and basements
- Fix any leaks promptly
Tips for Your Client’s Tenants:
- Be sure tenants have an emergency number to call if they discover a water leak
- Inform tenants about mold-producing conditions such as steamy showers
- Run the bathroom fan at least one hour after every bath or shower and their kitchen fan while cooking
- Open the windows on nice days to ventilate the house or apartment
- Keep beds, couches, and chairs away from walls
- Do not over-pack storage areas such as closets, cabinets, or the attic
- The EPA’s “Brief Guide to Mold, Moisture and Your Home” is a quick read that will help tenants with the basics of mold prevention. (Download it for free at http://www.epa.gov/mold/pdfs/moldguide.pdf.)